Alstom Wind Chief Sees Turbine Growth in Brazil, Europe

Alstom (ALO) SA, the third-largest power-
equipment maker, expects higher sales for its wind turbines this
year and next, buoyed by growing demand in Brazil and offshore
bids in Europe.

“We’ve improved all our financial indicators this fiscal
year” ending March compared with last year, including sales,
order intake and operational performance, Alstom renewable unit
chief Jerome Pecresse said in a March 15 interview. “We’re
expecting growth to continue next year.”

“We’re seeing strong growth of the Brazilian market this
year,” Pecresse said at company headquarters near Paris. Alstom
will announce a “significant” order in Brazil this week, and
Electricite de France SA has picked Alstom’s turbines for a 150-
megawatt farm in Morocco, he said.

“We’re also seeing the pickup of the offshore wind
industry in Europe,” which should account for “several
gigawatts of new installs per year” within five years.

Alstom entered the wind market through the purchase of
Spain’s Ecotecnia in 2007. It has yet to crack the top 10 global
suppliers in the industry though today it’s inaugurating a
prototype for offshore farms to gain market share at a time when
the land-based wind market is suffering from overcapacity.

‘Significant’ U.S. Drop

The company is predicting stable markets in Europe andChina next year, a “significant drop” in the U.S. if a tax
credit for wind power isn’t extended in 2013, and “growth in
the rest of the world,” Pecresse said.

Any reduction of wind farm financing by banks “isn’t
noticeable for now,” he said.

Competition among manufacturers and improvement in costs
will allow land-based wind power to reach “grid parity”
without government subsidies in some European countries in three
to five years. Brazil’s latest bids show onshore wind power has
reached grid parity there, he said.

“There are overcapacities in many geographical areas,”
the Alstom executive said. “In the long run, that will
progressively translate into the concentration of the industry”
as building offshore wind turbines requires “significant”
balance sheets and “a good deal of customers will focus on a
limited number of suppliers.”

Wind Is Profitable

Alstom’s wind business has remained profitable even as
prices slumped thanks to the company’s global footprint, which
allows it to buy parts such as forgings in India and China, and
“established” relations with utilities, Pecresse said.

The company doesn’t provide specific figures for its wind
business. The operating margin of its renewables unit, which
includes hydropower equipment, fell to 7.3 percent of sales in
the April-September period from 9 percent a year earlier, hurt
by price erosion in wind. Renewables orders in the April-
December period climbed 26 percent to 1.3 billion euros ($1.7
billion).

Pecresse said it’s his duty to examine acquisition
opportunities in all renewable industries including wind, hydro
and solar power. He declined to say whether Alstom looked at
Suzlon’s unit.

Alstom, which has wind turbine plants in Spain, Brazil andTexas, may seek a partner to develop its business in Asia, where
it has no wind footprint, Pecresse said.

Still, “offshore, Latin and North America are the
priorities,” he said. The plant in Amarillo, Texas, only has
“a few small contracts” amid a “very competitive backdrop”
in the U.S.

French Factories

Alstom has said it will invest about 100 million euros in
France in factories that will make tower, blades, generators and
nacelles if the EDF-led consortium it’s a member of wins more
than half of the French bid to build 3,000 megawatts of offshore
wind power. The result of the tender is due in April, the
government said.

Alstom will also bid to supply turbines for 3,000 megawatts
of offshore wind to be built in France by 2020, Pecresse said.

The 6-megawatt turbine inaugurated today near Nantes in
western France has 73.5-meter (241-foot) blades, the biggest
prototype for offshore wind farms assembled, he said.